Question

The following is the Statement of Profit or Loss and the Statements of Financial Position for Nachos Bhd (NB) for the year 2019: Nachos Bhd Statement of Profit or Loss For the year ended 30 September 2019 RM RM Sales 220,000 Cost of sales (98,000) Gross profits 122,000 Selling and distribution costs 25,000 Administrative costs 15,000 Depreciation 2,000 Profit on sale of plant (2,000) (40,000) 82,000 Interest expense (6,000) Investment income 1,000 Gain on sale of investment 2,000 Profit before tax 79,000 Tax (22,000) Profit for the year 57,000 Nachos Bhd Statements of Financial Position as at 30 September Year 2019 Year 2018 RM RM Ordinary shares of RM1 each 130,000 100,000 Share premium 10,000 Retained Profit 90,000 50,000 Non-current liabilities 10% convertible debentures 50,000 60,000 Bank loan 23,000 33,000 Current liabilities Accrued selling expenses 2,500 1,000 Trade payables 12,500 15,000 Tax payable 2,000 1,000 320,000 260,000 __________________________________________________________________________________ ACCT2122/March2020 Page 5 of 7 Non-current assets Land 200,000 140,000 Plant and machinery (cost) 30,000 40,000 Accumulated depreciation – plant and machinery (5,000) (6,000) Office equipment (cost) 20,000 20,000 Accumulated depreciation - office equipment (3,000) (2,000) Investments 30,000 40,000 Current assets Inventories 7,000 5,000 Trade receivables 20,000 17,000 Cash in hand 21,000 6,000 320,000 260,000 Additional information: 1. Sale of plant and machinery was for cash. There were no purchase of plant and machinery during the year. 2. Land was purchased for cash. 3. Depreciation charged of RM2,000 in the statement of profit or loss comprised depreciation of RM1,000 each for plant and machinery and office equipment. 4. RM10,000 of the convertible debentures were converted into ordinary shares in year 2015. 5. The increase in the issued share capital was due to the issue of shares for cash and the conversion of debentures. Required: a) Describe the importance of Statement of Cash Flows. (4 marks) (CLO3:PLO3:C2) b) Prepare the Statement of Cash flows for OKUB for the year ended 30 September 2019 (using indirect method). (21 marks)

Answer 1

Answer
Importance the expenses a ΟΥ. a) Ans the of statement of Cash flows is very important to Privestors because it shows how much. cash. the firm's in a Company and Business of fiscal year ended generated. The statement of flow encludes and Revenues on the other hand Income Statement includes the Revenues and expenses And Cash Flows statement is very important because it tells you how much cash went into and out of Company a Specific time period Such as quarter or a year. And it Sounds very Similar to the income statement which shows how much revenue came in and much expenses went out. à Potential Investment one most important traits is the firm's or company ander tilby ability to generate Cash. Statement of cash flow separated into three section Cash Flows from Operating Activities; from Prvesting, Activities and from Investors should look closely of the Company's how much Cash a firm Generates from its Operating Activities because it shows how well the business firms during how financing Activities

Producing Cash Company Cash flow spent from Investing Activities that are ultimately benefit to the shareholders shows how much cash on investment. Investments are usually classified as Capital expenditures or monetary investments Cash flow from financing Activities show any Activity involved in transaction with the company's Owners and Debtors. In simple words it tells amount of ences Casha company Generated or invest in new opportunities for the business without affecting the existing Operations. reprensented ennich stockholders

Aya) b) Nachos Bhd (NB) Statement of Cash flow (for the year endeol 30 september, 2019) Cash Flow. From Operating Activities Net Income RM57,000 Adjustment to reconcile_ Net Palome to Net Cash Provided by Operating Activity Depreciation And Amortization 2poo Gain on sale of Investment (2,000) Increase in Inventory (2000) Increase in Trade Receivable (3,000) Increase in Accrued liabilities 1,500 Decrease in Trade Payables (2,500) Increase in Tane Payable 1000 Net Cash Proxideal by Operating Activities RM52,000 Cash Flow. from Pnvesting Activities Purchase of and RM60,000) Sale of plant and machinery Net Cash used in Provesting Activities RM150,000) Activities 10,000 Cash flow from financing Issue of shares Proceeds from Issue of shares convertible Debentures RM30,000 10,000

Interest on Debenture Share Premium Payment of Dividend (17,000) Net cash wed in financing Activities. 2013,000 Increase in cash IRM 15,000 Cash at the Beginning of the year 6000 Cash at the end of the year RM21,000 or Note & Bracket "c I shows on Amount Cash outflow or minus Negative_Amount: Working sheet: statement of cash flow. - Not Income for the yeau RM 57,000 Depriciation Expense įund Amortization. Depriciation 2019_was RM 2000 Delit Cash inflow via Depriciation and Amortization in Cash flow statement. (3) Investment Goulin on sale of Puvestment (RM 2000) Credit Reflecting cash out flow via Gain on sale of Investment in Cash flow Statement.

RM 7000 5000 Inventory Pnventory 2019 Lexo. Inventory 2018 Increase in Inventory. (RM2.;000) Credit Reflecting cash Increase in Inventory in Cash flow outflow via Statement. Increase in Trade Receivable Trade Receivable 2019 RM 20,000 Less & Trade Receivable 2018 17,000 . Increase in Trade Receivable RM3,000 Credit Reflecting cash outflow via Increase in Trade Receivable in cash flow! Statement © Increase in Accrued liablities Accrued Expenses 2019 RM2,500 lessio Accrued Expenses_2018 Increase in Accrued Expenses RM1,500 Debit Reflecting positive or cash in flow via Increase in Accrued liabilities in Cash flow statement. 1000 Decrease in Trade Payable Trade Payable 2019 RM 12,500 Trade Payable 2018 15,000 Decrease in Trade Payable (RM2,500)

in 8 Credit Reflecting cash outflow via Decrease in Trade Payables Cash flow statement. Tax Payable Tan Payable 2019 RM 2000 lesso Tak Penyable_2018 1000 Increase in Tax Payable RM 1000 Debit Reflecting cash inflow via Increase in tan Payable in Cash flow statement. © land land 2019 Less : land 2018 RM 200,000 140,000 Purchase of land CRM60,000) Credit Reflecting cash out flow wla Cash Purchase of land in Cash flow statement. RM 30,000 -40,000 so Plant and machinery Plant and machinery 2018 lesso, plant and machinery 2012 Cash Sale en plant and Machinery RM 10,000 Debit Reflecting cash inflows_vila Sale of plant and machinery

RM RM Ordinary shares Ordinary shari 2018 130,000 Lesso Ordinary shares 2017 100,000 Debit Reflecting Issue of Ordinary shares RM 30,000 Cash inflow via Tesue of share Convertible 10% Debantures into Ordinares shares Tau of Toy emium 2018 RM 50,000 less's Issue of Debenture 2017 60,000 Contrertible into Ordinary shares RM10,000 Debit Reflecting cash inflow via Increase in Share Capital Issue of shares. 2 13 Сл. Share Premium Interest Paid Issue of convertible Debentures into Ordinary shares of Cated onto Reflecting cash out flow via Issue of shares and Debentures in cash flow statement. (RM 10,000) Dividend Dividend payment calculation.

RM 50.000 Retained Earning - Beginning on Tearszad, October 1, 2019 Addo Net Income 57,000 RM & 107,000 90,000 Total lexio Retained Earnings, Ending on Sept. 3.2009 Payments of Dividend in the year ended Sep. 31, 2019 was Credit Reflecting use of cash for Dividends in Cash flow statement RM 17,000